- The USD / CHF extended the overnight rejection slip from the SMA resistance to 200 days.
- Speculation about negative Fed rates has undermined the dollar and exerted pressure.
- The bulls did not seem to be impressed by the risky mood as attention now turned to the NFP.
The USD / CHF has dropped to three-day lows in the past hour, with bears now awaiting a follow-up sale below 0.9700.
After facing rejection near the all-important 200-day SMA again, the pair experienced an intraday reversal on Thursday and interrupted three consecutive days of losing streak. On Friday, the withdrawal extended for the second consecutive session and was sponsored through widespread sales in US dollars.
The dollar remained depressed at the start of the European session on Friday, when the Fed believed rates could be below zero. Investors have argued that a worse than expected economic slowdown could force the US central bank to become more experimental in order to deal with the coronavirus crisis.
Meanwhile, the optimistic mood in the market, which tends to undermine the demand for a safe haven for the Swiss franc, did not provide support or halted the corrective slide in progress. In the context of the latest optimism regarding the reopening of economies in certain parts of the world, the feeling of global risk has been stimulated by the easing of tensions between China and the United States.
Trade officials from the United States and China said the Phase 1 agreement remained on track despite a dispute over the origin of the coronavirus. It should be noted that US President Donald Trump has threatened to terminate the trade deal and impose new tariffs on Chinese products in retaliation for its concealment and mismanagement of the early virus epidemic.
With bulls raising morale at risk, it will now be interesting to see if the pair is able to find support at lower levels or if the fall confirms the formation of a bearish pattern at several peaks on the daily chart.
Going forward, market participants now look forward to the release of monthly US employment details on Friday. The NFP report is expected to show that the US economy cut a record 22 million jobs in April and that the unemployment rate has reached 14%. The data will influence the price dynamics in USD and give a significant boost on the last day of the week.